ACCOUNTS - Final Accounts


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Registered number: 02447811










Metro Mechanical Services Limited










Annual report and financial statements

For the year ended 31 March 2019

 
Metro Mechanical Services Limited
 

Company Information


Directors
N Gaisman (appointed 16 July 2018)
M Marks (appointed 16 July 2018)
T Sampson 
L White 
M White (resigned 16 July 2018)




Registered number
02447811



Registered office
Unit A3 Lion Business Park
Dering Way

Kent

DA12 2DN




Independent auditors
Kreston Reeves LLP
Chartered Accountants & Statutory Auditor

37 St Margaret's Street

Canterbury

Kent

CT1 2TU




Page 1

 
Metro Mechanical Services Limited
 

Contents



Page
Strategic report
3 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditors' report
7 - 10
Statement of income and retained earnings
11
Balance sheet
12
Notes to the financial statements
13 - 27


 
Metro Mechanical Services Limited
 

Strategic report
For the year ended 31 March 2019

Introduction
 
The directors present their strategic report for the year ended 31 March 2019.
The Company’s strategy is to be the first choice nationwide for commercial drainage. This strategy consists of several key components: promoting a gold standard of health and safety; delivering exceptional customer service; offering technical expertise in its areas of specialism; and providing rewarding careers for its employees.

Business review
 
During the period under review, the Company continued to implement its strategy successfully. Despite macroeconomic and political uncertainty in the broader business environment, the Company saw increased revenue for the period compared to the prior year. The Company also undertook several investment initiatives with the aim of enhancing productivity and customer service.
The Company considers its Key Performance Indicators to be gross profit growth, earnings before interest, tax, depreciation and amortisation (EBITDA) margin, and revenue per employee. The Directors are satisfied with the performance against these KPIs, although they believe there is scope for improvement in future periods.

Principal risks and uncertainties
 
Health & Safety: the work that the Company carries out frequently presents health and safety hazards to its employees and members of the public. These risks include those related to vehicle safety, manual handling, slips, trips and falls, work at height, hazardous material, confined spaces, and the operation of machinery. The Company takes these risks extremely seriously and has an accredited safety management system compliant with OHSAS 18001, as well as a formal review of health and safety at each board meeting.
Team: the performance of the business is driven by the successful recruitment and retention of high-quality engineers and support staff. The business has continued to add to its employee base and has experienced a reduction in turnover in employees. There is ongoing investing in recruitment and retention for the future. The directors continue to monitor this as a strategic priority.
Regulatory: failure to comply with existing regulation poses a serious risk. The Company’s ISO 9001 audits focus on ensuring compliance with existing regulations. The Company actively monitors potential changes in legislation (for example, changes to waste transfer regulations; changes to the regulated remit of the utility and water sector; changes to employment law; or changes to transport regulations).
Financial: principal financial risks include credit risk and liquidity risk. The Company carries out credit checks on new and existing customers. The Company has historically experienced minimal bad debts, although it continues to invest in improvements to its credit process. Liquidity risk arises from an inability to meet short or long-term financial obligations or to carry out strategic investments. The Company currently has low liquidity risk on account of its financial performance and cash position.
 
Page 3

 
Metro Mechanical Services Limited
 

Strategic report (continued)
For the year ended 31 March 2019


Principal risks and uncertainties continued...
Cyber: the Company is reliant on IT infrastructure to carry out its essential service tasks (including job management, client communications and invoicing). The risk of a cyber-attack has been mitigated by investment in the Company’s security infrastructure to ensure that robust protections are in place across its networks. The continued improvement of technology across the Company’s operations is a strategic priority.
Key Customers: the Company has long-term relationship with a number of key customers. These relationships may be terminated without cause or on written notice. Although the Company knows of no reason why such contracts would be terminated or would not be renewed, the Directors cannot guarantee that the relevant parties’ commercial position or market conditions will not alter their position. The loss of these customers could have a material adverse effect on the financial position and future prospects of the Company.


This report was approved by the board on 20 December 2019 and signed on its behalf.



M Marks
Director

Page 4

 
Metro Mechanical Services Limited
 

 
Directors' report
For the year ended 31 March 2019

The directors present their report and the financial statements for the year ended 31 March 2019.

Results and dividends

The profit for the year before the exceptional intercompany loan write off was £1,167,594 (2018 - profit £993,400). When factoring in the intercompany loan write off the loss for the year was £1,832,406.

A dividend of £480,000 was paid during the year (2018 - £60,000). The directors do not recommend the payment of a final dividend for the period ended 31 March 2019.

Directors

The directors who served during the year were:

N Gaisman (appointed 16 July 2018)
M Marks (appointed 16 July 2018)
T Sampson 
L White 
M White (resigned 16 July 2018)

Future developments

The directors aim to maintain the current levels of activity, seeking new business in the prescribed field of expertise, with a view to future growth of the company.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditors

The auditorsKreston Reeves LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 20 December 2019 and signed on its behalf.
 





M Marks
Director

Page 5

 
Metro Mechanical Services Limited
 

Directors' responsibilities statement
For the year ended 31 March 2019

The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:

select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;


prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Page 6

 
Metro Mechanical Services Limited
 

 
Independent auditors' report to the shareholders of Metro Mechanical Services Limited
 

Opinion


We have audited the financial statements of Metro Mechanical Services Limited (the 'Company') for the year ended 31 March 2019, which comprise the Statement of income and retained earnings, the Balance sheet and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 March 2019 and of its loss for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006.



Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:


the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.



Other information


The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.


In connection with our audit of the financial statementsour responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


Page 7

 
Metro Mechanical Services Limited
 

 
Independent auditors' report to the shareholders of Metro Mechanical Services Limited (continued)


We have nothing to report in this regard.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.



Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement on page 6, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 8

 
Metro Mechanical Services Limited
 

 
Independent auditors' report to the shareholders of Metro Mechanical Services Limited (continued)


Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:


Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.



We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.


Page 9

 
Metro Mechanical Services Limited
 

 
Independent auditors' report to the shareholders of Metro Mechanical Services Limited (continued)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Samantha Rouse FCCA DChA (Senior statutory auditor)
  
for and on behalf of
Kreston Reeves LLP
 
Chartered Accountants
Statutory Auditor
  
Canterbury

20 December 2019
Page 10

 
Metro Mechanical Services Limited
 

Statement of income and retained earnings
For the year ended 31 March 2019

As restated
2019
2018
Note
£
£

  

Turnover
 4 
14,894,141
13,194,605

Cost of sales
  
(7,707,531)
(6,525,923)

Gross profit
  
7,186,610
6,668,682

Administrative expenses
  
(5,467,887)
(5,369,266)

Operating profit
 5 
1,718,723
1,299,416

Amounts written off investments
 13 
(3,000,000)
-

Interest receivable and similar income
 9 
4,668
1,758

Interest payable and expenses
 10 
(88,477)
(37,308)

(Loss)/profit before tax
  
(1,365,086)
1,263,866

Tax on (loss)/profit
 11 
(467,320)
(270,466)

(Loss)/profit after tax
  
(1,832,406)
993,400

Retained earnings
  

-  as previously stated
  
6,074,837
4,766,888

-  correction of a prior period error
  24
(305,757)
68,792

At the beginning of the year as restated
  
5,769,080
4,835,680

  

(Loss)/profit for the year
  
(1,832,406)
993,400

Dividends declared and paid
  
(480,000)
(60,000)

Retained earnings at the end of the year
  
3,456,674
5,769,080
The notes on pages 13 to 27 form part of these financial statements.

Page 11

 
Metro Mechanical Services Limited
Registered number: 02447811

Balance sheet
As at 31 March 2019

As restated
2019
2018
Note
£
£

Fixed assets
  

Intangible assets
 14 
1
1

Tangible assets
 15 
1,785,388
1,733,949

  
1,785,389
1,733,950

Current assets
  

Stocks
 16 
76,725
98,856

Debtors: amounts falling due within one year
 17 
6,317,857
4,041,569

Cash at bank and in hand
 18 
273,468
3,144,374

  
6,668,050
7,284,799

Creditors: amounts falling due within one year
 19 
(4,069,839)
(2,488,161)

Net current assets
  
 
 
2,598,211
 
 
4,796,638

Total assets less current liabilities
  
4,383,600
6,530,588

Creditors: amounts falling due after more than one year
 20 
(926,821)
(761,403)

  

Net assets
  
3,456,779
5,769,185


Capital and reserves
  

Called up share capital 
  
100
100

Capital redemption reserve
  
5
5

Profit and loss account
  
3,456,674
5,769,080

  
3,456,779
5,769,185


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 20 December 2019.




M Marks
Director

The notes on pages 13 to 27 form part of these financial statements.

Page 12

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

1.


General information

The Company is a private limited company incorporated in England and Wales. The registered office is Unit A3 Lion Business Park, Dering Way, Gravesend, Kent, DA12 2DN. The Company's registered number is 02447811.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The financial statements are rounded to the nearest pound.
The functional currency of these financial statements is Pounds Sterling.

The Company has elected to apply all amendments to FRS 102, as set out in the triennial review published in December 2017, prior to the mandatory adoption for accounting periods beginning on or after 1 January 2019.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial reporting standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Hillgate (1234) Ltd as at 31 March 2019 and these financial statements may be obtained from 37 St Margarets Street, Canterbury, Kent CT1 2TU.

 
2.3

Going concern

Despite the losses made by the company during the year which has arisen due to the exceptional intercompany loan write off and therefore the directors considered the company to be a going concern.

Page 13

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

2.Accounting policies (continued)

 
2.4

Revenue

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. 

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

Where services have been provided to a customer but have not invoiced at the year end, the company recognises the proportion of revenue based on the labour hours incurred up to the year end. The associated revenue is recognised in the financial statements as accrued income. 

 
2.5

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to the Statement of income and retained earnings on a straight line basis over the lease term.

 
2.6

Interest income

Interest income is recognised in the Statement of income and retained earnings using the effective interest method.

 
2.7

Finance costs

Finance costs are charged to the Statement of income and retained earnings over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.8

Borrowing costs

All borrowing costs are recognised in the Statement of income and retained earnings in the year in which they are incurred.

Page 14

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

2.Accounting policies (continued)

 
2.9

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in the Statement of income and retained earnings when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.10

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Statement of income and retained earnings, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 
2.11

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Statement of income and retained earnings over its useful economic life.

Other intangible assets

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Goodwill
-
10
years

Page 15

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

2.Accounting policies (continued)

 
2.12

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Plant and machinery
-
20%
Motor vehicles
-
25%
Office equipment
-
15%

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of income and retained earnings.

 
2.13

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.14

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.15

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.16

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Page 16

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

2.Accounting policies (continued)

 
2.17

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Statement of income and retained earnings in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance sheet.

 
2.18

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to related parties.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of income and retained earnings.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 
2.19

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 17

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year.  The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial statements:
Lease commitments
The company has entered into a range of lease commitments in respect of property, plant and equipment.  The classification of these leases as either financial or operating leases requires the directors to consider whether the terms and conditions of each lease are such that the company has acquired the risks and rewards associated with the ownership of the underlying assets.
Tangible fixed assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 15 for the carrying amount of the property, plant and equipment, and note 2.11 for the useful economic lives for each class of assets.


4.


Turnover

The whole of the turnover is attributable to the business activity of the company.

All turnover arose within the United Kingdom.


5.


Operating profit

The operating profit is stated after charging:

2019
2018
£
£

Depreciation
808,310
828,510

Operating lease rentals
62,431
188,158

Pension costs
116,538
77,646


6.


Auditors' remuneration

2019
2018
£
£


Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
8,000
10,623



Page 18

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2019
2018
£
£

Wages and salaries
5,447,278
4,683,829

Social security costs
574,058
493,678

Cost of defined contribution scheme
116,538
77,646

6,137,874
5,255,153


The average monthly number of employees, including the directors, during the year was as follows:


        2019
        2018
            No.
            No.







Directors
4
4



Administration
43
43



Direct Labour
99
78

146
125


8.


Directors' remuneration

2019
2018
£
£

Directors' emoluments
384,895
413,494

Company contributions to defined contribution pension schemes
6,000
5,900

390,895
419,394


During the year retirement benefits were accruing to 1 director (2018 - 1) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £232,483 (2018 - £213,452).

The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £6,000 (2018 - £5,900).

Page 19

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

9.


Interest receivable

2019
2018
£
£


Bank interest receivable
4,668
1,758

4,668
1,758


10.


Interest payable and similar expenses

2019
2018
£
£


Discounting charges
42,087
-

Hire purchase interest
46,390
37,308

88,477
37,308


11.


Taxation


2019
2018
£
£

Corporation tax


Current tax on profits for the year
473,144
316,966


Total current tax
473,144
316,966

Deferred tax


Origination and reversal of timing differences
(5,824)
(46,500)

Total deferred tax
(5,824)
(46,500)


Taxation on profit on ordinary activities
467,320
270,466
Page 20

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2018 - lower than) the standard rate of corporation tax in the UK of 19% (2018 - 19%). The differences are explained below:

2019
2018
£
£


(Loss)/profit on ordinary activities before tax
(1,365,086)
1,263,866


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2018 - 19%)
(259,366)
240,135

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
574,653
187,149

Capital allowances for year in excess of depreciation
-
(110,318)

Other differences leading to an increase (decrease) in the tax charge
(2,006)
(46,500)

Group relief
(36,133)
-

Payment of group relief
190,172
-

Total tax charge for the year
467,320
270,466

In the current year, £190,172 (2018: £Nil)  of the UK corporation tax charge relates to a payment to Hillgate (1234) Ltd for losses surrendered by way of group relief.


Factors that may affect future tax charges

There were no factors that may affect future tax charges.


12.


Dividends

2019
2018
£
£


Dividends on ordinary shares
480,000
60,000

480,000
60,000

Page 21

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

13.


Exceptional items

2019
2018
£
£


Intercompany loan write off
3,000,000
-

3,000,000
-

The exceptional administrative expenditure represents the profit and loss impact of the write off of an intercompany loan.


14.


Intangible assets




Goodwill

£



Cost


At 1 April 2018
1



At 31 March 2019

1






Net book value



At 31 March 2019
1



At 31 March 2018
1

Page 22

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

15.


Tangible fixed assets





Long-term leasehold property
Plant and machinery
Motor vehicles
Office equipment
Total

£
£
£
£
£



Cost or valuation


At 1 April 2018
50,400
870,180
3,661,121
244,507
4,826,208


Additions
-
120,353
689,875
56,376
866,604


Disposals
(50,400)
(19,515)
(254,007)
(33,730)
(357,652)



At 31 March 2019

-
971,018
4,096,989
267,153
5,335,160



Depreciation


At 1 April 2018
50,400
509,418
2,393,676
138,765
3,092,259


Charge for the year on owned assets
-
130,395
164,100
32,461
326,956


Charge for the year on financed assets
-
5,917
475,437
-
481,354


Disposals
(50,400)
(19,515)
(248,554)
(32,328)
(350,797)



At 31 March 2019

-
626,215
2,784,659
138,898
3,549,772



Net book value



At 31 March 2019
-
344,803
1,312,330
128,255
1,785,388



At 31 March 2018
-
360,762
1,267,445
105,742
1,733,949

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2019
2018
£
£



Plant and machinery
65,083
-

Motor vehicles
1,233,525
944,000


16.


Stocks

2019
2018
£
£

Raw materials and consumables
76,725
98,856


Page 23

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

17.


Debtors

As restated
2019
2018
£
£


Trade debtors
3,843,141
2,854,255

Other debtors
35,573
30,486

Prepayments
334,800
60,355

Accrued income
2,098,519
1,096,473

Deferred taxation
5,824
-

6,317,857
4,041,569



18.


Cash and cash equivalents

2019
2018
£
£

Cash at bank and in hand
273,468
3,144,374

Less: bank overdrafts
(107,622)
(76,634)

165,846
3,067,740



19.


Creditors: Amounts falling due within one year

As restated
2019
2018
£
£

Bank overdrafts
107,622
76,634

Invoice discounting
1,414,148
-

Trade creditors
995,656
843,242

Amounts owed to group undertakings
190,172
-

Corporation tax
61,713
119,921

Other taxation and social security
652,953
398,003

Obligations under finance lease and hire purchase contracts
451,879
332,263

Other creditors
47,018
421,579

Accruals
148,678
147,953

Deferred income
-
148,566

4,069,839
2,488,161


Page 24

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

20.


Creditors: Amounts falling due after more than one year

2019
2018
£
£

Net obligations under finance leases and hire purchase contracts
926,821
761,403

926,821
761,403


All loans and hire purchase agreements are repayable within 5 years of the balance sheet date.
All loans and hire purchase agreements with HSBC Plc are secured by a fixed and floating charge over the assets of the company.
Mark David White and Julie Ann White have a fixed and floating charge of the property of the company, in relation to the liabilities in Hillgate (1234) Limited the parent undertaking.


21.


Deferred taxation




2019
2018


£

£






At beginning of year
-
(46,500)


Charged to the profit or loss
5,824
46,500



At end of year
5,824
-

The deferred tax asset is made up as follows:

2019
2018
£
£


Accelerated capital allowances
5,824
-

5,824
-


22.


Share capital

On 16 July 2018, the 95 ordinary shares and the 5 EMI ordinary shares of £1.00 each in the issued share capital of the Company were sub-divided into 950 ordinary A shares of £0.10 each and 50 ordinary B shares of £0.10 each.

Page 25

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

23.


Reserves

Capital redemption reserve

The capital redemption reserve represents the value of redeemed shares in prior periods.

Profit and loss account

The profit and loss reserve represents accumulated comprehensive income for the current and prior periods.


24.


Prior period adjustments

Two prior year adjustments have been recognised in relation to the income of the company. 
The first adjustment has arisen as it was identified that income had not been correctly recognised in prior years due to a miscalculation of accrued income. The error in the 2018 results has arisen due to the incorrect closing balance in the audited financial statements for the year ended 31 March 2017 and the error in the 2019 results is due to the incorrect closing balance in the audited financial statements for the year ended 31 March 2018.
The second adjustment has arisen as it was identified that income had not been correctly recognised due to a miscalculation of deferred income.
Due to the material nature of the errors, the financial statements have been adjusted accordingly.
The impact of this adjustment recognises the following:


2019
2018
£
£

Prior period adjustment 1


Accrued income
(227,849)
723,445

Corporation tax repayable/(payable)
36,056
(144,689)

(191,793)
578,756

Prior period adjustment 2


Deferred income
(148,566)
(637,455)

Corporation tax repayable/(payable)
34,602
127,491

(113,964)
(509,964)


(305,757)
68,792


25.


Pension commitments

The company pays into defined contribution personal pension plans held by certain employees and the contributions payable during the year amounts to £116,538 (2018: £77,647). At the year end there were contributions outstanding of £47,018 (2018: £34,295).

Page 26

 
Metro Mechanical Services Limited
 

 
Notes to the financial statements
For the year ended 31 March 2019

26.


Commitments under operating leases

At 31 March 2019 the Company had future minimum lease payments under non-cancellable operating leases as follows:

2019
2018
£
£


Not later than 1 year
97,370
96,497

Later than 1 year and not later than 5 years
395,023
392,877

Later than 5 years
613,338
712,854

1,105,731
1,202,228


27.


Related party transactions




2019
2018
£
£

Remuneration paid to close family of the directors
119,449
166,330
Dividends paid to directors
30,000
60,000
Purchases from close family of the directors
49,680
-
Amount due to close family of the directors
1,080
-
Dividends paid to parent company
450,000
-
Intercompany loan write off
3,000,000
-
3,650,209
226,330


28.


Controlling party

Metro Mechanical Services Limited became a subsidiary of Hillgate (1234) Ltd from 16 July 2018, a company incorporated in England and Wales.
Metro Mechanical Services Limited are included in the consolidated financial statements of Hillgate (1234) Ltd which are available from 37 St Margaret's Street, Canterbury, Kent, CT1 2TU.


Page 27